About 120 Unitec students will be given part-time jobs by IBM developing and supporting software for Westpac Bank under a five-year deal announced today.

The agreement sees Westpac become the "anchor customer" of an IBM Development Centre on Unitec's Mount Albert campus which be formally opened by Prime Minister John Key later today.

Westpac chief information officer Peter Fletcher said the work the students would do would include developing mobile banking applications for the bank.

IBM and Unitec announced their intention to open the development centre in August, saying they hoped to create about 400 full and part-time jobs at the facility within two years of today's opening.

The centre is one of 50 IBM has set up around the world and has been modelled on its Ballarat Delivery Centre which opened in Victoria, Australia in 2005 and now employs about 1000 people.

IBM said in a statement that the Westpac deal meant Unitec students would get relevant paid experience, increasing their chances of getting good jobs after they graduated, while the centre would improve its ability to serve customers both in New Zealand and overseas.

Westpac chief operating officer Jim Stabback said it made commercial sense for the bank to use the development centre, but it also saw broader societal benefits.

The alternative would have been for it to take on more full-time staff or contractors or farm the work out more conventionally, he said.

"Selfishly, it gives us additional capability and capacity by giving us another set of resources on which to draw. [But] it is complementary to our corporate strategy of 'growing New Zealand'. It provides a framework that allows New Zealanders to continue to learn and earn and transition into a workforce for which there is significant demand."

Fletcher said it was one of the "most positive" things he had been involved in.

"I think it is great for the country, the company and the students. Everybody wins."

IBM spokesman Andrew Tubb said the most of the students had now been recruited and were in their second week on the job.

They were being paid well above the minimum wage at rates "commensurate with market rates for this type of work and IBM pay scales".

Their hours were capped at a maximum of 20 per week so as not to interfere with their regular studies.

IBM was not currently considering setting up any similar facilities elsewhere in New Zealand, he said.

"'We want to grow Unitec before we think about aspirations anywhere else, but you never know."